Student property and its effect on the UK economy

Student property has been big news in the investment world for some time now. High yields and even higher demand mean that while other forms of investment may be dithering, student property keeps on taking confident strides forward.

What is driving demand?

There are several reasons why demand for student housing is so high at the moment. Firstly, and most obviously, is the amount of people who now choose to go to university as opposed to entering the workplace when they leave school. This figure has been steadily increasing decade on decade and, with the government’s recent lifting of the cap on available places, this trend looks set to continue for the foreseeable future.

International students are on the increase too. UK universities are widely regarded as being amongst the best in the world and foreign students are flocking here to take advantage of many seats of learning that we have in Britain. Students from overseas all need to be housed while they study, and many analysts are predicting that the amount of international students entering the UK will grow significantly over the next decade.

Another reason for the increased demand is that students are simply more discerning these days when it comes to choosing where to live. Gone are the days when a shabby flat, or worse still a squat housing four or five students of questionable cleanliness, will do.

The young adults entering our universities expect far more nowadays, which is why the purpose built student property sector is so buoyant at the minute. While students are still snapping up standard residential property, purpose built accommodation does offer something more in the way of community to residents.

They are also often situated within close proximity of the university grounds as well, so they have the added bonus of convenience. Couple this with the fact that purpose built student accommodation is generally cheaper for the student too rent and it is easy to see why this particular market is flourishing

What does this mean for the economy as a whole?

The overall effect that increasing student numbers has on the economy is generally regarded as being positive. While the amount of money being invested in students by the British taxpayer is far from insignificant, the returns that we get from the graduates far exceeds this figure.

According to a report conducted by the National Union of Students (NUS) back in 2013, student spending helps to support over £80 billion worth of economic output for the United Kingdom. In case you were wondering what this equates to, the figure is comparable to around a third of the entire aviation sector to the UK.

This expenditure made by students each year is responsible for supporting over 830,000 jobs, too. The number of people employed as a direct or indirect result of student spending is actually greater than the entire population of the 2008 European City of Culture, Liverpool.

What about the local effect?

The difference that the student population has on the economy at a local level can also be astounding. Take the University of Birmingham as an example. This single university supports 11,800 jobs, 3,000 of which are a direct result of student spending alone, and generates a staggering £460 million every year. That’s 2.2% of the city’s entire economic wealth!

Student property is part of the overall picture and the overseas investment that it attracts also adds to the British economy. With demand for places so high and the benefit to the UK economy so obvious, it’s clear that investment in purpose built student accommodation will remain one of the best places to put your money over the coming years. 

*This article was written by Jade Waddy, editor at property investment firm Aspen Woolf.